A superb interview of Prof. Ian Walker, transport psychologist (HT: Thebrowser.com). This blog supports urban initiatives to promote using bicycles for work, travel etc.
However, things are not as easy as this interview suggests. Cyclists are not wanted by either walkers or car people. Town planners never sure where to place them:
It is interesting to read such papers.
Brigitte Madrian of Harvard says that so far we have sued traditional route to increases savings – matching contributions. With behavioral economics we have more tools like text reminders, simplification, automatic enrollment etc. These latter approaches have a great impact than the traditional approach:
A nice survey by Zakaria Babutsidze of United Nations University.
In this paper I review the evidence from marketing and psychology literature about the purchase behavior of consumers. I concentrate on the characteristics of the choice process, choice of the external information source and nature of the information obtained from these sources. The impact of important systematic differences among consumers and products on choice behavior is also discussed.
Summary is consumers are different (irrational) and complex. They use heuristics and decisions differ across products. On durables, they spend more time gathering information and so on:
A nice interview of one of my fav econs – Robert Shiller.
He discusses behavioral economics, its history and way forward. He even discusses Einstein..He also points to how med school grads are taking interest in econ seminars because of linkages with neuroscience..
Link to the discussion is here. The eight econs in the discussion are:
Chetty, Gabaix, Leeson, argue for using behavioral econ to enrich their studies…Way to go…
Each one lists how to better state of econ…Nice read on forthcoming research from the top young minds
A super interview of Maarten Bos of HBS. She discusses her research on unconscious mind and its underutilized potential.
The research in a way is quite similar to Daniel Kahneman’s research. But the stress on unconscious mind is quite a read.
Martha Lagace: What do you mean by unconscious thought?
The title has been picked from this amazing interview of Daniel Kahneman (HT: MR Blog).
There are quite a few one-liners which have amazing insights. Call them Kahnemanisms if you like:
This one on his work is just amazing:
Michael L. Marlow (of CPSU) and Sherzod Abdukadirov (of GMU) write this nice note.
They argue that there is little reason to think that govt. nudges will shrink Americans’ waistlines.
Obesity is one of the major concerns for both US public and policymakers:
A nice paper by Henry Saffer, Dhaval Dave, Michael Grossman.
The rational/neoclassical model on understanding alcoholic behavior treats both heavy and light drinkers as one. As a result the analysis does not show the right results. In this paper, the use the behavioral economics idea of treating heavy and light drinkers as two different types.
A fab paper mixing experimental economics with behavioral economics. Unfortunately I can’t find a free version of the paper.
It is written by four econs- Steven Levitt, John List, Susanne Neckermann and Sally Sadoff. The first two names are well-known.
They say beh eco has become serious business and applied in a many econ fields. However, it is missing in education sector and this is an area which should benefit greatly from beh eco. They run experiments to show this:
A super interview of the great Psychologist.
SPIEGEL: Professor Kahneman, you’ve spent your entire professional life studying the snares in which human thought can become entrapped. For example, in your book, you describe how easy it is to increase a person’s willingness to contribute money to the coffee fund.
Kahneman: You just have to make sure that the right picture is hanging above the cash box. If a pair of eyes is looking back at them from the wall, people will contribute twice as much as they do when the picture shows flowers. People who feel observed behave more morally.
SPIEGEL: And this also works if we don’t even pay attention to the photo on the wall?
Kahneman: All the more if you don’t notice it. The phenomenon is called “priming”: We aren’t aware that we have perceived a certain stimulus, but it can be proved that we still respond to it.
SPIEGEL: People in advertising will like that.
Kahneman: Of course, that’s where priming is in widespread use. An attractive woman in an ad automatically directs your attention to the name of the product. When you encounter it in the shop later on, it will already seem familiar to you.
Read on…As always exciting..
A super-informative article from WSJ. It tells you of this lab in Yale called Comparative Cognition Laboratory.
Some scientists find inspiration in the lab. Others trek into the field. Laurie Santos likes the local coffee house.The 36-year-old runs Yale University’s Comparative Cognition Laboratory, which examines the origins of the human mind by studying primate cognition. Many of her experiments try to determine the roots of human economic behavior.
The primate lab is home to 10 “shockingly smart” brown Capuchin monkeys trained to trade tokens for food. It was a short leap for Dr. Santos and her team to decide to study how monkeys make decisions about money. In setting up a monkey market economy, they knew they had to gather the kind of data that would “convince an economist,’” said Dr. Santos, so she enlisted the help of Keith Chen, an associate professor of economics at Yale School of Management. They usually met at the coffee shop to swap ideas. Once the effort got under way, students in the lab started dropping in, too. They all liked the central location, informal setting and “having an excuse to get coffee,” she said. In deference to her students’ late-night habits, most meetings were held in the afternoon.
Superb. From the website of Comparative Cognition Laboratory:
I posted about how Indian government is trying to sensitize children towards wasting food.
Now it takes a step further. It had earlier also specified that people waste too much food at weddings and social functions. This needs to be curbed. They have done a study along with Centre for Consumer Studies at Indian Institute of Public Administration (not yet public) on the initiative.
BS covered the results in this press release.
Catherine Rampell points to this interesting article by Sendhill Mullainathan and Saugato Dutta.
They ask what makes a good parent/bad parent?
It is always good to hear policymakers talk about psychology and behavioral economics.
RBI Dep Gov. HR Khan gives this nice speech on the topic. He covers how certain asopects of behavior lead to market movements, market anomalies etc. The summary is:
Navi Mumbai Police has come out with a superb nudge to prevent drunken driving and accidents (Thanks to Niranjan for the pointer).
It has put up a highly damaged car for display with the board saying “Speed Thrills but Kills”:
Two wrecked vehicles loaded on the back of a truck formed an ugly roadside exhibit, but served as a graphic – and unsettling – reminder of what can happen when one swills and steers. The Navi Mumbai police, alarmed by the number of road fatalities, displayed a smashed-up car and a damaged bike at various spots to make people aware of the dangers of drunken driving.
The unusual move — cops generally display posters and banners on road safety — yielded encouraging results, as a number of passers-by stopped and enquired about the incidents that reduced the vehicles, especially the car, to mangled pieces of metal.
“Did anyone come out alive of this car?” asked many onlookers.
Hmmm..
This idea will be taken to several place in Navi Mumbai for spreading the message:
“In 2011, 298 motorists died in accidents; it’s a disturbing number. We realised that we needed to come up with a different approach to dissuade citizens from drinking and driving,” Inspector Nitin Gite, who is in charge of the APMC traffic police unit in Navi Mumbai.
He added that instead of using pictures and videos, senior officers had decided to display mangled vehicles at popular spots. On Sunday, the truck with the badly damaged car and bike was parked near Inorbit mall in Vashi. A number of shoppers took a look at the two exhibits, imagining and discussing the terrifying moments of the crashes.“This is great way to discourage motorists from driving under the influence. The condition of the car conveys a strong message,” said BPO employee Suhel Pandit, who lives in Vashi.
The wrecked car will be taken to several other places in Navi Mumbai this week to create awareness among motorists. On December 11, it was driven by 21-year-old Rakesh Chavan. Three of his friends — Nilesh Bhatt (21), Sunny Sharma (20) and Karandeep Singh (18) — were his co-passengers.
As I live in this area, really happy to see Navi Mumbai Police using the idea. Did they read the book nudge?
Much like the way Central Railways used the nudge ideas to prevent people from crossing rail tracks which showed some great success..
Would be interesting to see results of this exercise. Meanwhile Navi Mumbai could also look at TN’s road safety system for lessons.
Daniel Kahneman is the flavor of the econ season as he has just released his new book - Thinking, Fast and Slow, A dear friend suggests it is a must read as it covers almost anything and everything on how human mind thinks and acts..
There are two superb profiles of the man who introduced behavioral economics to the world (alongwith Amos Tversky).
First is a profile by Michael Lewis nicely titled as King of Human Error (TGS titles it as Great Man Kahneman). And second is this by Evan R. Goldstein is managing editor of The Chronicle Review. I learnt via this article that the name prospect theory is meaningless. Kahneman and Tversky wanted something distinctive and easy to remember. It surely has sruck in minds.
Chronicle also points to this astonishing graph which shows reach of Prospect theory. Its broad idea that people are sisk averse when they make profits and risk seekers when losing has found applications in many fields – medicine, law, political science etc. So far, there have been 8000 references in different journals and chapters across many disciplines. That is truly massive.
Yes says Francesca Gino of HBS and Dan Ariely of Duke University in this paper. Here is a review in HBS newsletter.
In his 1641 treatise, Meditations on First Philosophy, philosopher René Descartes introduced the concept of an “evil genius,” a powerful force of nature who is equally clever and deceitful. Since then, the world has given us plenty of examples—Hannibal Lecter in The Silence of the Lambs, fictional Wall Street villain Gordon Gekko, and real-life Wall Street villain Bernie Madoff, to name a few. Not only were these classic bad guys unquestionably unethical, but all were inarguably creative in carrying out their bad behavior as well. Indeed, it’s rare to hear anyone described as both evil and unoriginal.
This raises a question: Is there a link between creativity and unethical behavior?
There certainly is, according to an article in a forthcoming issue of the Journal of Personality and Social Psychology. In “The Dark Side of Creativity: Original Thinkers Can Be More Dishonest,” the authors report that inherently creative people tend to cheat more than noncreative types. Furthermore, they show that inducing creative behavior tends to induce unethical behavior.
I received this email from Linkedin team (am sure most linkedin subscribers must have received it):
BS carries an article today on this initiative by XLRI – India’s premier B-school.
It has set up a behavioral lab to study why people buy/consume in India:
